subject: The Different Types Of Stocks To Trade On The Market [print this page] Stocks are acquired when an organization sells off some of its shares. This entitles the buyers to an ownership interest in that company. Becoming a shareholder in an organization allows you voting rights during the annual company meetings. It is during these meetings that the board of directors are voted in. Sometimes, these meetings can also be used for voting out the sitting board.
Being a shareholder does not in any way affect your personal assets. When the company is faced with bankruptcy or other financial difficulties, the shareholder has limited liability. The only thing you can get to lose in such an instance is your investment.
There are different types of stocks available in the market;
Blue chips;
These are one of the types that you will find trading at the exchange. They are issued by large, well established companies which are considered to be safe and in good financial shape. These companies are also considered leaders in their particular industries. In addition, they pay regular dividends to their shareholders in both good and bad times.
Value stocks;
These stocks are usually under priced as compared to the financial strength of the company issuing them. This means that they trade for less than they are worth at the exchange market. However, these companies could still be doing well financially. It has been shown that, these companies usually end up doing better than most that are available in the market.
growth stocks;
The company issuing them usually has an income growth that is faster than that of other companies in the industry or in the general market. The growth stocks are usually overvalued and are very common in the technology industry. They pay little or no dividends. The income is usually used for expansion purposes.
Common and preferred stocks;
Common shareholders receive variable dividends and get to vote for board directors during the annual meetings of the company. However, the preferred shareholders do not get any voting rights. They are however, entitled to receive a fixed dividend share. In the event of a company facing liquidation, the preferred shareholders get to be paid after the creditors. The common shareholders are usually the last to receive payment in the event that a company closes down or is declared bankrupt. However, the preferred shareholders can lose their stocks at any time to the company. This happens when the company decides to buy them out.
The Different Types Of Stocks To Trade On The Market
